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Why Rivian Stock Popped Today
Key Points
Investment bank UBS upgraded Rivian's stock to a buy.
Software and services could also help to boost the EV maker's profit margins.
Shares of Rivian Automotive (NASDAQ:RIVN) rose more than 8% on Monday, following bullish analyst commentary.
The Rivian R2. Image source: Rivian Automotive.
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The R2 looks like a hit
Rivian's revenue jumped 38% year over year to nearly $2.2 billion in the third quarter. The electric vehicle (EV) maker's deliveries increased 46% to 19,248 vehicles, fueled by sales of its new midsize SUV, the Rivian R2.
"Customer and media feedback on R2 has been exceptional," CEO RJ Scaringe said in the company's Q3 earnings release.
Rivian, in turn, boosted its full-year delivery target to 67,000 to 70,000 vehicles, up from a prior forecast of 65,000 to 70,000.
Shareholders could be in store for even more gains
UBS analyst Joseph Spak believes Rivian has more room to run. He sees the EV upstart's share price rising another 30% to $17.
Spak thinks investors should consider buying Rivian's stock ahead of a forthcoming ramp in R2 sales. He expects fast-growing sales volumes of the more affordable SUV to drive Rivian's margins higher, hastening its push toward profitability.
Rivian's adjusted net loss per share narrowed to $0.48 in the third quarter from $0.65 in the year-ago period.
Spak also highlighted Rivian's software and services segment as another potential profit driver. The division's third-quarter revenue and gross profit surged 45% and 66%, respectively, to $605 million and $256 million.
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.